Investing: Should you believe these 5 market truisms?

Most market sayings have a statistical basis — but some are more wacky than useful.

Presidential cycle

The stock market follows distinguishable patterns depending on the year of a president’s term.

Track record: Between 1949 and 2017, the Dow Jones industrial average returned an average of 15.8 percent in preelection years, as incumbent administrations did what they could to goose the economy.

Looking ahead: The indicator suggests that 2019 will be a good year for stocks.

Sell in May and go away

The stock market posts its weakest returns from May through October, suggesting that investors should lighten up on stocks during that six-month period.

Track record: Since 1945, the S&P 500 has averaged a 1.4 percent return in the May-through-October period. November-through-April returns average 6.6 percent.

Looking ahead: Though the data are compelling, market-timing is rarely the best strategy, especially if you’ll incur transaction costs and tax consequences.

As goes January, so goes the year

Stock market performance in January tends to predict calendar-year performance.

Track record: Since 1946, a positive January return in the S&P 500 has resulted in an 11.1 percent average gain over the next 11 months. A January loss has resulted in a 1.3 percent average gain.

Looking ahead: The S&P 500 gained 7.9 percent in January, presaging an upward trajectory for stocks in 2019.

Hemline theory

Women wear shorter skirt styles during periods of positive market returns and economic prosperity.

Track record: Believers point to short skirt styles in the economically prosperous 1920s and 1980s, each of which saw dress styles lengthen around market crashes late in the decade. But serious market-watchers dismiss the indicator as pure superstition.

Looking ahead: For what it’s worth, plenty of lengthy skirts graced the runways at the latest New York Fashion Week, a potential bearish signal.


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